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Europe’s Media Giants Battle Over Digital Satellite TV

September 1, 1995

BERLIN (AP) _ Electronics shop owner Theodor Ramelsberger, whose customers in the Bavarian hamlet of Rapperzel all get their TV by satellite, was impressed by the new Nokia-made digital satellite receiver.

He was not alone.

The technology that debuted this week at the Berlin consumer electronics show is the new darling of European media powers, heralding the continent’s entry into digital broadcasting.

Two companies, Germany’s KirchGruppe and Netherlands-based NetHold, announced orders for 2.1 million satellite receivers during the show, nearly half from Nokia.

Analysts say it is a significant risk for a market that won’t really exist until after Luxembourg-based SES puts two Astra satellites with digital transponders into orbit in October and March.

But a necessary risk, argue Kirch and others who have already rented enough satellite space to transmit 240 channels to Europe by the end of 1996.

Many European cable systems are owned by state telecommunications monopolies, such as those in France and Germany. The cable systems lack digital capacity, which through data compression squeezes eight channels where one previously was broadcast.

Two methods to protect digital video signals from piracy have emerged and will do battle primarily in Germany, Europe’s richest media market with 8 million satellite TV customers and 15 million households on cable.

One method is supported by the KirchGruppe, which provides the bulk of entertainment programming for German-language television from a 15,000-film library outside Munich, and NetHold, which has 2.5 million satellite subscribers in 43 European and African countries.

The other is backed by a consortium that includes Luxembourg broadcaster CLT; France’s Canal Plus, Europe’s biggest pay-TV company; and Deutsche Telekom, owner of the world’s largest cable system.

At the Berlin show, Ramelsberger closely questioned a KirchGruppe salesman displaying the Nokia-made receiver.

``My customers don’t want to be piling decoders one on top of another on the TV set,″ he said.

If consumers buy this set-top box about the size of a VCR _ at a price of at least $800 _ will they also be able to get competitors’ programs? The answer is probably no. There is no talk of a universal decoder for the signals of competing program providers.

The privately held KirchGruppe’s presentation at the Berlin trade show stressed its determination to gain its standard an early foothold in a market that also is emerging in the United States, where only about 1 million households get digital satellite TV.

Via satellite from its Munich base, Kirch’s BetaTechnik subsidiary broadcast 27 channels to Berlin. Four offered separate camera angles during live broadcasts of professional soccer matches.

Other channels showed ``Forrest Gump″ every 30 minutes, a taste of what the industry calls near-video-on-demand.

Kirch’s chief executive for multimedia, Gottfried Zmeck, estimated that $3 billion will be invested in digital satellite market in Germany alone in the next three years.

``We made a commitment for 1 million decoders (from Nokia),″ he said. ``We do not intend to lose money on this.″

Zmeck’s company, owned by the 68-year-old Leo Kirch, has a record of media savvy rivaled in Germany only by chief competitor RTL Television, a member of the CLT- and Canal Plus-led consortium, which only had prototypes on display at the Berlin show.

The set-top boxes Nokia debuted in Berlin can receive 500 channels, and also have modems to connect to phone lines and interfaces for CD-ROM players and computers.

``This is more than a digital satellite receiver,″ said May Wiklund, Nokia’s communications director. ``It has a back channel that enables home shopping, sending and receiving faxes, Internet access and sending and receiving e-mail.″

European media analysts generally believe telephone-based online services will lead the way into the digital multimedia age. But the KirchGruppe is placing its bet on satellite TV.

``The driving machine will be television,″ said Zmeck. ``The familiar thing in the home is the TV set.″ He said Kirch plans next to develop a keyboard for interacting with the television and digital decoder.

Felix Neiger, an analyst at the Prognos economic think tank in Basel, Switzerland, thinks the KirchGruppe is gambling.

``Its not exactly clear how this market will take off in the beginning,″ he said. Prognos projects the potential German market for digital television will be only $2.6 billion by the year 2000.

``People must have a decoder. They must pay for these additional programs. And the readiness to pay is just not there,″ Neiger said.

A survey published in this week’s Stern magazine found three in four Germans unwilling to pay another pfennig for television.

Just 4 percent said they would pay up to 50 marks, or $30.

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